THE GISTSince taking office riding the wave of a promise to “Make America Great Again,” President Donald Trump has singled out a variety of opportunities to shift a focus of manufacturing and manufactured goods within the U.S. Toward the end of January, Trump received a report that homed in on aluminum and the potential outcomes of changing tariffs or quotas on the material.

Compiled by Commerce Secretary Wilbur Ross, the report is meant to determine whether aluminum imports pose a threat to national security, a statement that could run the gamut from one particular country all the way to a blanket assumption that any aluminum from anywhere outside U.S. borders could create risks. About 98% of can sheet—the material from which cans are rolled—is produced domestically.

Canada currently represents more than half of the country’s imported aluminum, with Russia and the United Arab Emirates rounding out the top-three exporters to the U.S. Fourth is China, which may be the focus of the investigation and a subsequent decision, given their manufacturing and exporting practices have long been a source of ire for Trump.

From the time the report hit Trump’s desk on Jan. 19, it started a 90-day window to decide what action should take place, if any at all. Once a decision is made, there is a 15-day timeframe for that conclusion to be put in place by the federal government. The core of any choice would harken back to Trump’s ongoing pledges to bring jobs back for blue-collar Americans, though his promises and their economic impact are something of a mixed bag.

WHY IT MATTERSWhile there are many variables and gray areas involved regarding aluminum’s Section 232 report, one thing that’s for certain is an impact on the beer industry, should action be taken.

As we reported last week, cans are a big part of industry growth for packaged beer. In IRI’s multi-outlet and convenience retail channel universe, aluminum represents the top 10 spots in dollar sales growth for commonly-used packaging from 2015-2017. In overall sales for 2017 alone, cans represented seven of the top 10 spots in straight dollar sales.

Needless to say, cans are kind of a big deal.

Brewers Association chief economist Bart Watson has also highlighted this, noting that cans now represent 28.5% of packaged production for BA-defined craft breweries. Watson reports that, in recent years, the BA’s craft brewery members producing less than 100,000 barrels a year “shifted more heavily to cans than breweries who produced more than that.” The Beer Institute, meanwhile, says that 56% of all beer sold in the U.S. is served in aluminum cans or bottles.

Any potential outcome from Trump’s report would roll downhill toward beer. The Brewers Association says that “a one-cent increase per can – because of a tariff – will cost the can industry upwards of $960 million.” That could mean higher costs for everyone, including drinkers.

“If there are duties on aluminum coming to this country, it will obviously get passed on to us and the customer,” Tim Weiner, senior commodity risk manager at Molson Coors Brewing Co., said in June 2017. “Our prices will go up.”

According to a report on the topic prepared by John Dunham & Associates for the Beer Institute, almost 5% of the cost of beer comes from imported aluminum, and if passed on to the consumer, the final outcome would see prices rise, but perhaps not painfully so. If a 20% tariff were enacted, for instance, it could mean a roughly 20-cent increase per case after adding increases across brewer, wholesaler, and retailer levels.

If added costs are reflected in final price on shelves, it’s still less than a percent change. But at a time when policies are supposed to kick the economy in high gear, nobody likes paying more, right?

Additionally, the Beer Institute report goes on to estimate overall economic impacts. A tariff of 10% on imported aluminum, it says, would cost brewers $116.8 million more, a 20% tariff would cost $233.7 million, and a 30% tariff would cost $350.6 million. Along with potential for higher prices of aluminum-packaged beer, the report also estimates that varying levels of tariffs could also lead to fewer jobs from production to retail, ranging from 1,806 (10% tariff) to 3,611 (20% tariff) and up to 5,417 (30% tariff) fewer positions, due to higher costs.

Last week, CEOs from a variety of food and beverage companies, including the Beer Institute, Brewers Association, Constellation Brands Beer Division, Molson Coors, and Rogue Ales, sent a letter to President Trump urging him not to move forward with changes that might impact their bottom line and customers’ wallets.

"Imports of primary aluminum and cansheet used to manufacture beer cans do not threaten national security," Jim McGreevy, Beer Institute president and CEO, says in a release announcing the letter and continued opposition.

Unfortunately, a hint at a final decision by Trump isn’t clear, although recent coverage from Bloomberg suggests something might be coming to impact imported aluminum. In a report created by Goldman Sachs and shared by Bloomberg, Jeffrey Currie, global head of commodities research at Goldman Sachs, says:

“We think a trade tariff on aluminum is more likely than not to be imposed. The situation is fluid and there is still great uncertainty associated with the tariff rate, the targeted countries, and potential retaliations from America’s trading partners.”

All of which highlights the awkward reality of the situation: there are lots of potential outcomes to lots of potential situations, and something has to be decided by April 19. Review of the report could result in tariffs across the board, limits on aluminum imports, limits with restrictions for specific countries or categories of aluminum, or nothing at all, providing as much clarity as your favorite Stout.